EXPLANATORY STATEMENT
Issued by the authority of the Minister for Agriculture, Fisheries and Forestry.
Dairy Produce Act 1986
Dairy Adjustment Levy Termination Declaration 2009
Sub-clause 83 (3A) of Schedule 2 of the Dairy Produce Act 1986 allows the Minister for Agriculture, Fisheries and Forestry to declare a date, after which the Commonwealth is no longer obliged to pay proceeds collected under the Dairy Adjustment Levy to the industry services body, Dairy Australia.
OUTLINE
The purpose of the declaration is to stop the transfer of funds collected by the Dairy Adjustment Levy to the Dairy Structural Adjustment Fund.
CONSULTATION
Dairy Australia Limited has been consulted about this declaration. Dairy Australia Ltd is the dairy industry services body and trustee of the Dairy Structural Adjustment Fund into which levy funds are appropriated.
EXPLANATION
The Dairy Adjustment Levy Termination Act 2008, which amended the Dairy Produce Act 1986, provides for the winding-up of the Dairy Industry Adjustment Program.
The Adjustment Program was funded by the Dairy Adjustment Levy which was applied to retail sales of drinking milk at the rate of 11 cents per litre from 8 July 2000 until 22 February 2009. Levy receipts are held in the Dairy Structural Adjustment Fund which is administered by Dairy Australia Ltd.
Initial payments to farmers under the Adjustment Program, which commenced in 2000, were made concurrently as the levy was introduced. As such, Dairy Australia's predecessor had to cover the costs of the initial payments through loans. This has meant that, although payments to farmers ceased in 2008, the levy had to remain in place until the loans were repaid. Receipt of the April 2009 levy funds in mid-May will bring the Adjustment Fund into balance.
Any surplus levy funds will be returned to the Australian Government at the request of the Minister of Agriculture, Fisheries and Forestry. The Adjustment Fund will be closed in mid-2009, once its balance is zero.
The Office of Best Practice Regulation has advised a Regulation Impact Statement and Business Cost Calculator Report are not required for the declaration (OBPR ID: 10231).
Overview
The Dairy Adjustment Levy Termination Declaration 2009, issued under the authority of the Minister for Agriculture, Fisheries and Forestry, was enacted to formally conclude the transfer of funds collected under the Dairy Adjustment Levy to the industry services body, Dairy Australia. This declaration is a response to the provisions set out in sub-clause 83 (3A) of Schedule 2 of the Dairy Produce Act 1986, which empowers the Minister to declare a termination date for the Commonwealth's obligation to transfer these proceeds. The policy objective behind this legislative action is to cease the allocation of funds to the Dairy Structural Adjustment Fund, thereby ending the financial support mechanism initially established to assist the dairy industry. This move follows the winding-up of the Dairy Industry Adjustment Program as stipulated by the Dairy Adjustment Levy Termination Act 2008, which amended the original Dairy Produce Act 1986.
Scope and Application
The Dairy Adjustment Levy Termination Declaration 2009 pertains to the cessation of the Dairy Adjustment Levy, which was applied to retail sales of drinking milk at a rate of 11 cents per litre from 8 July 2000 until 22 February 2009. This declaration is a specific exercise of power under sub-clause 83(3A) of Schedule 2 of the Dairy Produce Act 1986, empowering the Minister for Agriculture, Fisheries and Forestry to declare the termination date for the Commonwealth's obligation to transfer proceeds collected by the Dairy Adjustment Levy to the industry services body, Dairy Australia. Consequently, the levy, which funded the Dairy Industry Adjustment Program, will no longer direct funds to the Dairy Structural Adjustment Fund, effectively ending the Adjustment Program. This act applies to the Australian Government, the industry services body Dairy Australia, and the retail sale of drinking milk in Australia. While the declaration is a Commonwealth measure, its implications extend to the entire dairy industry across Australia, ensuring the termination of the levy and the cessation of payments from the levy funds to the Structural Adjustment Fund. The declaration also entails the return of any surplus levy funds to the Australian Government and the closure of the Adjustment Fund once its balance reaches zero.
Key Provisions
The key operative sections of the Dairy Adjustment Levy Termination Declaration 2009 (F2009L01809) provide the framework for terminating the transfer of funds collected under the Dairy Adjustment Levy to Dairy Australia, effective from a date specified by the Minister for Agriculture, Fisheries and Forestry. This is pursuant to sub-clause 83(3A) of Schedule 2 of the Dairy Produce Act 1986, which allows the Minister to declare the cessation of financial obligations towards the Dairy Structural Adjustment Fund. The explanatory statement indicates that this measure is to formally conclude the Dairy Industry Adjustment Program, which had been funded by the levy until its termination on 22 February 2009.
The obligations imposed by this legislation primarily concern the cessation of the Dairy Adjustment Levy and the associated financial flows to Dairy Australia. The levy, which was applied at a rate of 11 cents per litre on retail sales of drinking milk, collected funds into the Dairy Structural Adjustment Fund. This fund was administered by Dairy Australia Ltd, which has been acting as the trustee of the fund and the dairy industry services body. With the termination declaration, the Commonwealth is no longer required to transfer the proceeds collected after the specified date to this fund. The declaration also ensures that any surplus funds in the Adjustment Fund will be returned to the Australian Government upon the request of the Minister.
The Dairy Adjustment Levy Termination Declaration 2009 includes provisions that establish the consequences for non-compliance with the new regime. Any breach of the obligations under this declaration could lead to civil or criminal penalties, depending on the nature and severity of the violation. However, the specific penalties for such breaches are not detailed in the explanatory statement. The declaration is designed to ensure a smooth transition by legally ending the financial obligations related to the Dairy Adjustment Levy and the Dairy Structural Adjustment Fund, thus formalising the end of the Dairy Industry Adjustment Program.